The grocery marketplace demands constant adaptation. What worked yesterday may not succeed tomorrow, pushing retailers to continually reassess their approaches to stay competitive. This is particularly true in today’s challenging retail environment; while inflation has slowed, Kantar research shows that grocery inflation continues to impact consumer confidence across the UK and strain shoppers’ budgets. But challenging conditions also create opportunities, and the most effective retailers have proven that their sophisticated loyalty programmes can offer more than a defensive strategy. These programmes can become a powerful engine for growth, enabling retailers to build meaningful customer connections that deliver results, writes Sarah Jarvis, Communications and Propositions Director, Eagle Eye.
The most successful programmes share two key commonalities: they use the incredible data asset generated from their loyalty programmes to offer personalised incentives to influence shopper behaviour, and they regularly innovate their propositions to ensure they stay fresh.
Personalisation Gets Results
Increasingly, retailers leading the charge with personalisation are proving that it can have a measurable financial impact on their operations. This is largely achieved through promotional efficiency: by tailoring offers to individual shoppers, retailers can allocate promotional spending with surgical precision, presenting the exact right level of discount or reward required to motivate an individual customer to convert. This is partly why companies leading in personalisation are projected to capture $570 billion in global growth by 2030, according to Boston Consulting Group analysis.
It is the data that an engaging loyalty programme generates that fuels this personalisation, something which is becoming more and more important for omnichannel retailers everywhere. With their extensive SKU inventories and frequent customer visits, grocery retailers possess a distinct advantage versus other verticals. They have the ability to make a real difference to their customers’ lives by being more helpful and relevant.
As competition intensifies, particularly as digital pure play retailers continue to advance their efforts in the grocery space, more traditional retailers must use the data asset they have to personalise the experience at every touchpoint, offering value over and above just price-based incentives. This spans health and wellness-based tips and rewards, personalised recipes, product provenance information, and so much more.
When loyalty-integrated offers and communications match customer preferences, redemption rates improve, basket sizes increase, and marketing efficiency rises dramatically. The result is a virtuous cycle where personalisation drives profit, which enables further investment in personalisation capabilities.
Innovative Loyalty Strategies that Deliver—The Tesco Approach
Tesco provides a compelling case study in how innovative, data-driven loyalty can fuel positive outcomes. For the last 30 years, Tesco has made loyalty a company-wide, CEO-sponsored strategic priority. The retailer was among the first to market with Partner Rewards, enabling customers to multiply the value of their earned points outside of the Tesco network, pioneered loyalty-linked financial services products to accelerate the earn rate for key customers, were the first in the UK to deploy exclusive Clubcard member pricing at the shelf, and integrated loyalty incentives into the checkout process and staff interactions early and often. As a result, the Clubcard ecosystem is one of the best in the industry, enjoying significant engagement and offering undeniable value to customers.
As a result, the Clubcard programme has impressive reach: over 23 million UK households participate, representing 82% sales penetration. Additionally, 16.3 million customers actively use the Tesco app, with engagement growing year over year.
In May 2024, Tesco introduced a new digital engagement strategy with the launch of Clubcard Challenges, a personalisation initiative powered by predictive AI. The programme creates custom missions, or challenges, for participants, allowing them to earn up to £50 in Clubcard Points by completing personalised tasks over six-week campaigns. The concept is simple yet impactful: customers are rewarded for engaging with unique challenges designed specifically for them.
What makes this initiative particularly effective is its technical sophistication. The system uses AI to establish individualised spend thresholds for each participant based on their purchase history, ensuring that only incremental spending will be rewarded. The algorithmic models make more than 190 intelligent decisions to assign each personalised challenge to individual customers, ensuring that products, categories, spending targets, and reward thresholds align with their shopping patterns. This level of precision makes the challenges highly relevant and, as a result, incredibly compelling for customers.
And the results speak volumes. During the final Christmas-themed Challenges campaign of 2024,10 million customers received their own personalised set of Clubcard Challenges, with 76% of site visitors converting to active participants. Among players, 62% reached the first reward threshold, collectively earning over half a billion extra Clubcard points!
Keeping the Data that Fuels Personalisation Flowing
Without a rich set of customer data, personalisation is impossible, and therefore it is critical that retailers continue to engage customers on their overarching loyalty offering, clearly communicating the value proposition to ensure that the benefits of identifying themselves are clear with every transaction. Initiatives such as member pricing have grown popular as they make that value exchange absolutely transparent and have driven up loyalty engagement rates across retailers all over the UK in recent years as a result.
Encouraging loyalty engagement must be an always-on, multi-pronged strategy, not something you can simply “set and forget”. In-store recruitment through signage and staff training is essential, as highlighted in our recent eBook, Grocery Loyalty in 2025: Lessons Learned, Insights Ahead. Building loyalty engagement steps into digital journeys is equally important. In-store prompts at checkout and high-value digital or app-only incentives are very effective at driving adoption, with regular email communications and in-app notifications playing an important role, too. Most importantly, the value the programme offers to customers must be clearly and regularly articulated.
The most successful programmes also create consistent omnichannel experiences, recognising customers and applying their preferences reliably across physical stores, websites, and mobile applications. This consistency reinforces the value of the loyalty relationship at every touchpoint.
Delivering Value, Delivering Results
For UK grocery retailers who continue to face inflation pressures in an incredibly competitive market, sophisticated loyalty programmes are both an effective method of delivering value to price-sensitive customers and a strategic data asset that fuels personalisation.
By prioritizing omnichannel engagement, gamification and integrated AI, retailers can ensure that their loyalty programmes are not only adept at creating connections with their customers and increasing retention but also fueling sustainable growth.
Comments are closed.